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Digital currency is a “fallacy” says Bank of Finland in a report

Regulators, governments and international bodies- everyone is talking about the ongoing crypto and blockchain developments. While some of these individuals or organizations have gone on to talk about their disbelief in cryptocurrencies, Bank of Finland has released a paper.

The paper published on 21st June is titled “The Great Illusion of Cryptocurrencies,” and as is clear from the name, it talks about Bitcoin being a fallacy. It’s written by Aleksi Grym,  who is the head of the Digital Central Bank process and Adviser on Digitization in the Financial Stability and Statistics Department.

This paper attempts to explain how social media and internet have “muddled our sense of fact and fiction,” and how the intrinsic nature of decentralized virtual currencies “shows how poorly understood the concept of money itself still is today.”

Grym believes that the only things that constitute as currency are the coins and banknotes, physically representing a unit of a financial account. If at all, currencies are digitized, it would “inevitably mean creating a financial record keeping system based on accounts.”

“Cryptocurrencies are not currencies at all but accounting systems for non-existent assets,” states Grym in his paper. He believes that it’s not just about cryptocurrencies or the technology that backs them. Accepting a digital central currency would mean letting the public have access to all records and transact anonymously. Such private transactions and anonymous trading are “questions of policy and unrelated to cryptocurrencies or their underlying technology.”

The global financial industry continues to be disrupted by advances in digital technologies, and one such innovation is the blockchain and crypto space. Given the possibility of transparent and decentralized transactions, user views are adapting to the latest trends, and their preferences are emerging as new challenges for the current banking system.

Taking a firm stand on cryptocurrencies, and a rather negative one, Grym writes that these are mere instruments for speculation, and will eventually burst like a bubble. That’s why he believes that their “fundamental value is zero.”

He further states that cryptocurrencies are primarily bought for criminal purposes and that it only holds “intangible value” for some of its customers. Let us know in the comments section if you agree with Grym’s views on cryptocurrencies.

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